## Direct Indexing Revolution: How Northern Trust Is Capturing Ultra-High-Net-Worth Demand Through Envestnet

The wealth management landscape is shifting toward personalization. Northern Trust Asset Management (NTAM), part of Northern Trust Corporation [NTRS], has moved to capitalize on this trend by integrating its tax-optimized direct indexing capabilities into the Envestnet platform—a strategic move aimed squarely at the ultra-high-net-worth (UHNW) investor segment.

For UHNW clients, cookie-cutter portfolios no longer suffice. These investors demand precision: the ability to exclude specific holdings based on personal values, apply quantitative tilts to capture targeted factors, and—critically—minimize the tax drag that erodes long-term wealth. NTAM's solution addresses all three through a single delivery mechanism. Financial advisors now have the tools to blend multiple indices, customize exclusions, and structure portfolios with after-tax returns as the north star.

## Why This Moment Matters for the Industry

Direct indexing has transitioned from a niche offering to a cornerstone strategy for leading asset managers. Unlike mutual funds or ETFs, direct indexing lets advisors tailor equity exposure at a granular level while simultaneously managing tax efficiency. The economics matter too: direct indexing commands higher fees than passive products and generates deeper client loyalty, making it attractive for revenue-focused firms.

Northern Trust's move reflects a calculated expansion play. By leveraging Envestnet's established advisor network, NTAM gains distribution scale without the overhead of building new infrastructure. The platform becomes a multiplier—amplifying the reach of institutional-quality investment strategies to a broader audience of wealth advisors.

This approach is not unique to Northern Trust. The market is witnessing accelerated adoption across the sector. BlackRock, Inc. [BLK] and State Street Corporation [STT] have similarly deployed customized model portfolios and direct indexing solutions via Envestnet in recent months, signaling consensus around the importance of tax-aware, personalized wealth management at scale.

## The UHNW Competitive Race Heats Up

What distinguishes this moment is the intensity of competition. Asset managers recognize that UHNW clients are increasingly price-conscious and feature-sensitive. They want advisors who can deliver not just investment returns, but after-tax value. Direct indexing, with its ability to harvest tax losses, rebalance tax-efficiently, and exclude holdings that conflict with personal principles, has become table stakes in that conversation.

Northern Trust's partnership with Envestnet positions the firm to serve advisors who lack in-house expertise in direct indexing implementation. The collaboration democratizes access to what was once an exclusive capability—bringing institutional-grade, tax-managed equity strategies within reach of a much larger advisor base.

## Market Positioning and Performance Context

The move arrives as Northern Trust shares have appreciated 14.4% over the past six months. The stock carries a Zacks Rank #3 (Hold). The direct indexing expansion underscores management's broader ambition: to drive incremental assets under management by offering differentiated, high-margin solutions tailored to evolving wealth management demands.

For advisors and investors watching this space, the takeaway is clear: the firms leading the charge on personalized, tax-efficient wealth solutions are shaping the future competitive landscape. Northern Trust's integration with Envestnet ensures the company remains front-and-center in that transformation.